Sainsbury's grows ahead of rivals as it takes control of bank

J Sainsbury has posted a 6pc rise in profits from its stores as Britain's
third largest supermarket reaped the benefits of its campaign to match the
price of Tesco on branded products and its sponsorship of the London 2012
Paralympic Games.

Justin King has been chief executive of Sainsbury's for almost ten yearsPhoto: Getty Images

Sainsbury's said that underlying pre-tax profits rose 6pc to £756m, slightly ahead of analyst expectations of £748m, with like-for-like sales up 1.8pc.

The retailer also confirmed that it will take control of Sainsbury's Bank by buying the 50pc held by its joint venture partner Lloyds Banking Group for £248m

This is the eighth consecutive year of growth for Sainsbury's under chief executive Justin King, who said the retailer is "delivering good growth in sales and profits" amd "well positioned for future growth".

Mr King was named the new chief executive of Sainsbury's in 2003, the year Asda overtook the company to become the second biggest supermarket chain behind Tesco. However, Sainsbury's sales growth - which is ahead of its major rivals - means it is now on course to overtake Asda and reclaim second place.

Mr King's future has been the subject of City speculation but, although he refused to deny that headhunters have been appointed to draw up a succession plan, he said that talk of his exit was "premature".

Referring to rumours about the future of Manchester United manager Sir Alex Ferguson, Mr King added: "He's been there 27 years, I think he has demonstrated what is possible."

On the performance of Sainsbury's, he added: "Our focus on helping our customers Live Well For Less is delivering good growth in sales and profit. Our key points of difference, such as the best quality own-brand, Nectar, Brand Match, coupon-at-till and industry leading service, are recognised by our customers.

"We continue to invest in offering customers choices of how they shop with us, bringing our food, clothing and general merchandise to more customers."

However, despite the sales growth, Sainsbury's recorded a decline in statutory pre-tax profits. This was because profits from the sale of property fell from £83m to £66m, and the retailer wrote down the value of its remaining property assets by £10m.

This meant that pre-tax profits fell 1.4pc to £788m on sales of £25.6bn, significantly below the £879m generated by Wm Morrison, which is Britain's fourth largest supermarket.

Mr King added: "Whilst we see no near term change in the current economic situation, we remain confident that by continuing to invest in our long-standing strategy and by understanding and helping our customers, we are well positioned for future growth."